The European dairy market: fats under pressure, proteins maintain a strong position [307th Edition of the Foodcom DAIRY Newsletter]

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The European dairy market is entering the final phase of spring with distinctly mixed sentiment across different segments. Although milk availability in Europe remains comfortable and production remains at relatively high levels, signs of limited supply are reappearing in some categories.

The greatest contrast is currently visible between milk fats and proteins. The butter market remains under pressure due to high cream availability and rising inventories, although in the short term, prices are supported by rising cream costs. At the same time, protein products continue to enjoy strong global demand, particularly whey protein concentrates and MPC, for which supply remains limited despite increased production.

Market participants are thus currently operating in two parallel realities. Segments related to milk fat remain structurally oversupplied, while high-protein products continue to benefit from strong demand supported by the growth of functional foods and the protein supplement sector.

Milk powder

The skim milk powder market remains relatively stable, with prices holding steady in most European countries of origin. Production is seasonally high due to favorable drying margins and ample availability of skim milk concentrate.

The international situation continues to provide additional support. Limited supply of U.S. NFDM is keeping global prices high, creating export opportunities for European suppliers despite challenges related to exchange rates.

Trading activity remains balanced. Buyers are present in the market but are exercising caution, while producers are directing significant volumes of product to warehouses at the peak of the dairy season. Feed-grade SMP continues to trade at prices similar to those of food-grade SMP.

Whole milk powder remains under moderate price pressure and is currently quoted at 3,300–3,400 EUR/MT. Production in Europe remains high, and many buyers have already secured their earlier purchase needs. Export demand is helping to absorb available volumes, though market sentiment is somewhat weaker than in previous weeks.

Cheese

The cheese market remains relatively stable, although raw material availability has increased due to persistently high milk supplies in Europe.

Mozzarella and Gouda continue to trade within similar price ranges, supported by stable demand from the foodservice and food processing sectors. At the same time, buyers have become more selective and are exerting less purchasing pressure than at the beginning of the quarter.

Cagliata prices have fallen slightly in recent weeks. Producers with access to attractively priced spot milk are increasingly opting for direct mozzarella production instead of using cagliata, which is temporarily limiting demand in this segment. However, the market expects this phenomenon to be temporary as seasonal summer trends develop

Fats

The butter market has stabilized following earlier declines, and prices rose slightly this week.

However, the broader market picture continues to indicate ample availability of milk fat in both Europe and the United States. High milk production and a steady supply of cream are supporting butter production, and inventory buildup remains evident in many regions.

In the short term, rising cream prices are supporting butter prices. In some transactions, cream prices have already exceeded the 4,000 EUR/MT level, making it difficult to maintain lower butter selling offers.

Nevertheless, many buyers are hedged for the coming months, which limits the potential for further increases. The futures market continues to point to weaker fundamentals in the longer term, especially if stockpiling persists in the second and third quarters.

Liquids

The liquid products market has strengthened again, particularly in the cream segment. Increased competition for available volumes and stronger short-term demand have clearly pushed up prices in Western Europe.

Skim milk powder (SMP) also rebounded compared to previous weeks, thanks to favorable SMP production margins and active demand from dryers. Availability remains sufficient, but sellers are limiting aggressive price cuts.

Spot milk prices in the Netherlands rose, while in Germany they remained relatively stable. Despite recent increases, these levels are still considered low compared to the prices paid to dairy farmers.

Whey concentrate continues to trade at 1,100–1,200 EUR/MT FCA, supported primarily by the very favorable economics of WPC80 production .

Whey and proteins

The whey powder market remains relatively stable, although trading activity in Europe is still limited. Prices are supported mainly by the profitability of production and high whey concentrate prices, rather than by strong spot demand.

Food-grade whey protein powder remains in the range of 1,700–1,800 EUR/MT, while feed-grade material remains stable at slightly lower levels. Buyers are not exerting significant purchasing pressure, but producers are also unwilling to make significant price reductions.

High-protein dairy ingredients such as WPC80, WPI, and MPC are performing significantly better.

WPC80 remains one of the strongest market segments. Prices in Europe remain at €26,000–27,000/MT, and interest in securing supplies for the third quarter remains very high. The availability of spot volumes is increasingly limited, while the development of high-protein products continues to drive demand.

The WPI market also remains strong, with prices reaching €29,000–30,000/MT. Producers continue to favor WPC80 production, which limits the growth in whey protein isolate supply.

MPC85 continues to rise, exceeding the 10,500 EUR/MT level. Reformulation trends and the search for alternatives to increasingly expensive whey proteins are driving additional demand.

Whey permeate and lactose are also gradually becoming more expensive. Higher SWP prices are supporting the value of permeate, and demand for lactose related to preparations for the third quarter remains stable in both Europe and export markets.